The Barbados economy is expected to feel the effects of the turbulence in the United States financial markets later, rather than sooner.

Central Bank Governor Dr Marion Williams said yesterday that while the situation is unlikely to have a significant impact on Barbados immediately…….

All of a sudden now, economists, financial advisers, politicians, businessmen and whoever else that relied on Standard & Poor figures to make concise decisions, now have to find themselves dashing back to the drawing board to revised figures. Why? Because the same economy that was coming out smelling like a rose this year is now heading for rough seas!

From The Barbados Advocate

THE Barbados economy is headed for rough times.

International rating agency Standard & Poors has revised downward it’s economic outlook for Barbados, predicting the island will have less economic growth this year and the next.

A lead S&P spokesman also forecasted foreign direct investment (FDI) into the island “could dry up” as a result of the economic turmoil in the United States (US) and internationally.

This bad news was expected to spread to all other Caribbean economies except Trinidad and Tobago, S&P’s director of Sovereign Ratings Richard Francis.

Francis shared these views with the Barbados Advocate ahead of US president George W. Bush signing a US$700 billion bailout plan for collapsing Wall Street firms into law.

“We are revising our forecasts for Barbados to one per cent growth this year and 1.5 per cent growth next year from 2.5 per cent and two per cent, respectively. In terms of the Caribbean overall, we have begun trimming our growth forecasts overall for the region, just as in Barbados (with the exception of Trinidad and Tobago),” the official disclosed.

Francis said it was “still too early to say what the effects of the bailout will be”, but believed the signs were not good.

“If you look at the economic releases from Barbados, you already see a sharp slowdown in growth, with first half growth of just 1.3 per cent with a decline in long-stay arrivals from tourists from the US. However, there were increases from British and Canadian tourists,” he said.

“The weak US dollar is probably helping with these tourists. Given the economic slowdown, we are starting to see in Canada and Europe, especially Britain, I would say that growth is probably to the downside”.

Francis said S&P’s prediction was that the US gross domestic product would drop at the end of December, “bottom out” between January and March next year “and then to show signs of recovery after that”.

He added, however, that America’s economic growth was unlikely to improve in 2009, “decelerating to just 0.8 per cent in 2009 (from 1.8 per cent in 2008). And the odds that an actual recession will result have risen to 80 per cent”.

According to him, this was not a good thing for Barbados, especially in the area of FDI inflows.

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